well, thats what i'd assumed and tried to say.
If the german chancellor wants to devalue or burst assets he also at same time devalues the national debt but if the debt is the main trading mechanism and its value also its own/only insurance value he surely devalues the entire economy/market – which doesnt work if its noit done by everyone at the same time – hence everyone at the same time propping up…..and as i ( tentatively) understand it the knock on risks from greece it that every eurozone country's govt has to admit that they are holding a busted flush and waiting for a sucker to come to the table ( as it were )- which they aint willing to do – hence the bank put more chips in + bought abit of the government debt out temporarily to keep them at the table ( as it were)

but as you have been insisting for years if the ground rules dont change, the behaviour and reflex behaviour doesnt

because the essential maintaining lie – that debt – or the debt market – ( same thing) has to grow for an economy to be healthy – is still maintained.

It feels wierd even typing that because it doesnt make any sense..
But thats the logic ( as i see it ) thats being sold to the public and the market and the gov'ts…if I'm wrong please correct me.

I re-read what I posted and it comes across as more aggressive than I meant. Sorry. Long day.

Your essential point of solidarity is key.

I agree with you about sticking together. I am very much of the stick together camp. BUT why do you think the only choice for sticking together is to bail out the banks and be their gimps together?

We could for example refuse to bail them out – together. We could force the banks and other financial institutions to mark the assets to market value – together. We could force those who made bad loans to pay for their own loses – together.

It is a false choice you present. It is not bail out together or cut the weak loose. We could face our losses and clear our financial system of its debts together.

Might this not be a better thing to do together than roll over and do tricks for the bankers together?

We simply do not have any other choice but stick together. Perhaps we have all been manipulated into this situation, but now we are here, we have no other reasonable choice

Sorry its taken me so long to understand your intended question. But we're getting there.

I think what you might be imagining is that in the past few years national central banks may have 'bought'/accepted as collateral 'assets' from their nations banks which are now worth very little. And don't want those 'assets' to be exposed.

If this is what you are imagining then yes, this is likely to be true. How much if their problem it is depends on the country.

The Fed for example has 'bought' about $1 Trillion worth of mortgage backed paper and debt from Fannie and Freddie. When the FED bought it it was at face value and not worth anything like that even then. That paper has been declining in value ever since. Today Fannie Mae came back for another $8 billion bail out after making a loss in just this quarter of $13b. Same time last year they lost $25B. So a trillion dollar bail out has decreased losses from 25 to 13B – Oh yea!

In the UK our debts are not just assets but investment direct in banks and a huge insurance scheme.

But governments buying these assets or accepting them as collateral doesn't protect them or increase their value. It just hides them. It gives the banks some place they can still get a lone. The ECB is now doing the same for both the Central Banks and ordinary banks.

So both CB's and the ECB are filling up with paper that isn't worth much and can't be sold. In addition all the banks have to pay the interest on all the money they are borrowing. And if they are increasing the total money supply will face devaluation of their currency and their credibility.

Your second question is simpler. Banks are buying government bonds with generally their own debt. IE a loan they made on a mortgage or a security they bought which is itself based on loans of some kind.

Greek banks bonds are virtually junk. The Greek central bank has been accepting that junk. Now Fitch has, and Moody's is going to, downgrade Greek Sovereign debt to junk. Partly because the CB is so stuffed full of junk paper but also partly because the nation is still felt likely to default or reschedule its debt. Despite the bail out.

Banks 'assets' are their loan book. That means the income that will flow back from those loans. Of course if the loans were poor there may not be any flow in the future. This is what everyone is lying about.

Hope this is helping. If not, keep asking. Maybe I need to start from the beginning and write from the ground up of this crisis. I just don't want to bore people.

thanks for your feedback

We're all struggling, believe me.

In my opinion you have seen the ugly and essential problem but not the answer.

As your instinct told you all that debt means we need some sort of growth to pay off the interest. Bingo.

We had a financial problem. Or rather the banks did. We borrowed, incurred MORE debt in order to lend them the cash to cover their debts.

They still have their debts and, therefore, the interest to pay on them. Although thanks to us they have not defaulted on payments. But to this debt we have now added our own, new debt and the interest on that also.

As you realised we will need to earn more than before now that we have taken on more debt.

Keynesian stimulus – or any kind of stimulus spending for that matter – is simple. Whatever you put in, in stimulus MUST make you more in return than the cost of borrowing it. Otherwise you have just made yourself poorer and in worse danger than before.

You can measure this. You can measure how much deficit/debt spending is going on and how much growth in GDP you are getting. If it dips below one € return for every € of debt taken on then you are going to drown and die. It's called a debt spiral.

We are in it.

We are because the stimulus euros and pounds and dollars we have been putting in have not been creating growth and therefore return. That money has been going to fill in a black hole in bank balance sheets.

They are holding 'assets' at false values. They cannot do this for ever. As assets blow up and get forcibly valued, the banks have to replace that destroyed and vanished value with real value,- That's where our euros come in. That, and the banks can keep failing debts from blowing up as long as they can keep a minimal cash flow going.

We are not increasing the value of our bonds by buying them. We are devaluing the money we are buying them with.

What we are doing is 'buying' bonds that can;t find any other buyer. By doing so we give the bank the 'value' of whatever we paid for them. But do they really have that value? Only if we could turn around and sell them to somebody else. But we can't can we. SO at the moment they are worthless. The gamble, the whole entire stupid 'policy' is for CB's to buy stuff that is worthless in today's market, give the banks we bought it from real cash so they can survive financially, and HOPE that as a recovery is conjured our of debt, that the value of the assets we bought, returns so we can sell them again.

If it doesn't return we are dead.
If it doesn't return before we can no longer service the debt we took on to buy them, we are dead.
If the banks don't recover after this bail out but need more, we are dead.
If people say bite me and don't accept severe austerity measures, we are dead.
If the speculators (big banks) think more money is to be made going after weaker countries, we are dead.

I could go on.

You are two/too kind. Seriously, thanks.

I and a growing number of others really look forward to receiving your instalments.